Intergraph suffered a major defeat today in its legal battle with Intel as an appeals court ruled that the evidence does not
support the argument that Intel is a monopolist.

The U.S. Court of Appeals for the Federal Circuit today overturned an injunction in Intergraph vs. Intel that effectively held that Intel violated sections of the Sherman Antitrust Act. Specifically, the underlying injunction held
that Intel held a monopoly in microprocessors and, as such, could not arbitrarily cut off supplies of chips and technical information to Intergraph.

The appeals court, in a 43-page opinion, dismissed the argument in
great detail. Intel has a huge market share and did in fact cut off the flow of technology to Intergraph at crucial times, the appeals court found. But, while Intel may be a tough competitor, the company's conduct did not constitute violations of antitrust law, the court found.

"In the proceedings whose record is before us, Intergraph has not shown a
substantial
likelihood of success in establishing that Intel violated the antitrust
laws," the court concluded in vacating the injunction.

"The Sherman Act does not convert all harsh commercial
actions into antitrust violations," the ruling stated. "Unilateral
conduct that may adversely
affect another's business situation, but is not intended to monopolize that
business, does not violate the Sherman Act."

The company has already said it
will appeal the lower court decision last month, which threw out some parts of the case. An appeal to today's ruling may have to be directed to the Supreme Court.

An Intergraph spokesman said that the company will evaluate its options as
a result of the ruling and likely announce a course of action next week.

The spokesman added that the lifting of the injunction will have little
practical impact on Intergraph because Intel has agreed to supply companies
with product pursuant to a settlement of claims brought by the FTC in
certain circumstances. However, the spokesman acknowleged that Intergraph's
claim for treble damages, which tend to be far higher than actual damage
awards, rested on the antitrust claim.

Intel spokesman Chuck Mulloy stated that the decision validates its
argument that the case involves a dispute over patents only and not
antitrust law.

Integraph filed its suit in 1997 claiming that Intel infringed its patents
and unlawfully withheld technology from Intel. Intel's acts, Intergraph
asserted, constituted violations of the Sherman Act, breached contracts between the companies and were negligent, among other claims.

The decision only applies to the injunction. Nonetheless, the court gave a
detailed analysis of Intergraph's arguments in the underlying case and
dismissed nearly all of them. The court, for instance, held that Intel's
technology does not constitute an "essential facility" that must remain
open to all downstream customers. The court also found that the evidence
does not support a finding that Intel illegally wields a monopoly in
microprocessors. The decision will likely send a signal to the
district court.

In October, the trial judge overseeing the main action threw out
Intergraph's claims of patent infringement. After that
decision, Intergraph's claims largely rested on the antitrust theories

With the patent claims on appeal and the questions surrounding the validity
of the antitrust claims, Intergraph's suit now seems mostly to rely on breach
of contract and negligence claims.

Discuss: Court lifts injunction in Intel-Integraph...

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